Sunday, March 23, 2014

Electricity transformation

As the world energy consumption continues to rise every year, the portion of energy generated from renewable sources is finally also increasing in a measurable way. For example, in 2012 over 28% of electricity produced in the EU was sourced from Renewables (with Norway producing 98% of their electricity in a clean way from large hydro!).

So slowly, but surely the mix of primary energy sources consumed to generate electricity in the grid is shifting more towards renewables. What implications could that have? One aspect to think about is the role of utility companies. Large electricity companies are operating coal, gas or nuclear power plants and sell their electricity on the market. But these old-school sources are now no longer competitive with electricity from renewable sources. German energy giant RWE admitted that in 2013 and started shutting down a good amount of its capacity. In fact, in a recent global PWC study 94% of utility company expect a complete transformation of the utility business model. Mostly decentralised, mid-scale renewable electricity could ultimately become the predominant grid source and utility companies would take the role of a safety net in case of peak demand. For this, they could charge an 'insurance fee' or as recently stated by a utility CEO "you don't pay the firemen for the water they use, but for being there when it burns".

But will it burn? Amory Lovins' Rocky Mountain Institute recently released a study on the potential of 'grid defection'. With local battery capacity on the rise and distributed roof top solar being widely available, they calculated when this system could reach economic electric grid parity and make it possible for customer to defect the grid entirely. 

Overall, it seems clear that the times of centrally produced, large scale dirty energy are economically over. The new normal will be a distributed system of clean energy sources as outlined by Hermann Scheer in his book "the energy imperative". What lies ahead is a difficult uphill road to get us there against the current status quo, but it is the only game in town.  

Other helpful resources on clean energy:

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